China's anti-trust investigation of Qualcomm has come to an end with the US chip vendor making concessions in order control damage to its operations in the country. The fine for the company and its agreement to adjust licensing fees are expected to only have a limited impact on Qualcomm's revenues and gross margins. However, the cancellation of Qualcomm's patent cross-licensing agreements will come as an advantage for China vendors looking to expand the licensing businesses of their own.Qualcomm previously demanded its clients sign an "umbrella" cross-licensing agreements that cover all of its clients. It was meant to protect small vendors from being sued by bigger ones over alleged patent infringement. The outcome of the antitrust probe means Qualcomm will be able to protect its share of the China market, which accounts for half of its revenues. Qualcomm can expect stable operations in China and strengthen its deployment of its own patents.But the setback in terms of the cross-licensing has cast doubt over the company's ability to continue such a practice elsewhere. In fact, South Korea has already ruled that Qualcomm will need to cut its licensing fees for Korea-based vendors to a level similar to that in China.Qualcomm will still be able to charge its clients licensing fees based on a percentage of the prices of their mobile devices, but the fees will be 35% lower than their previous levels, while the fees for 3G/4G hybrid and 4G standalone solutions will be separately calculated.Qualcomm is also expected to charge a fee for 3-mode LTE solutions, but will not be able to force its clients to sign a crossing licensing agreement. Such a move is expected to benefit vendors such as ZTE and Huawei who have large numbers of patents. Vendors who do not have too many patents, despite the benefit of reduced licensing fees charged by Qualcomm, may still need to spend big sums paying for the patents they license from other China vendors.Such a development may undermine Qualcomm's business. Without the protection from the cross-licensing agreement, device vendors may no longer see it necessary to choose Qualcomm solutions.To minimize the impact, Qualcomm has already worked out some other forms of protection to help clients avoid the threat of patent disputes. But China-based vendors may need to pay extra for the continuous protection. But such protection may not come cheap.On the other hand, both Huawei and ZTE are planning to release in-house developed solutions to replace those from Qualcomm. According to Digitimes Research's figures, annual shipments of Huawei's smartphones running on the vendor's own solutions amounted to almost 20 million units in 2014. This shows Huawei's reliability on Qualcomm has been dropping.For Qualcomm, it faces the possibility of more antitrust probes in other countries. And it is imperative for the chip vendor to maintain the competitiveness of its products.

In an effort to secure TV panels in 2015 as supply will be limited, Korea-based TV vendors Samsung Electronics and LG Electronics are each planning to outsource TV production orders to makers in Taiwan and China such as Compal and BOE who have relations with supply chain makers that can guarantee supply, according to Digitimes Research.LCD TV panel supply is expected to be limited in 2015, particularly for sizes 32-inch, which means that competition to secure such panels has increased. TV vendors meanwhile are looking to get around the situation and believe they have an advantage through outsourcing TV production to ODMs that have continuing relationships with panel makers such as Compal and Taiwan-based panel makers.LG and Samsung are two of the vendors expected to take such measures in 2015, with each planning to outsource upwards of one million LCD TVs to ODMs. LG is expected to transfer orders to Compal and Samsung to China-based BOE, with LG's orders expected to pick up in the second quarter of 2015.Samsung meanwhile aims to reach 60 million in LCD TV sales for 2016, up about 10 million on year, and plans to secure 32-inch LCD TV panels from BOE to help meet demand. Samsung may receive as high as three million 32-inch TV panels from BOE in 2016 depending on the panel maker's developments during the year, said Digitimes Research.

Output value for the global IC foundry industry is forecast to reach US$54.8 billion in 2015, up 12% from US$49 billion in 2014, according to Digitimes Research.IC demand for 4G smartphones will fuel the foundry sector's 12% output value growth in 2015, despite several unfavorable factors such as decelerating tablet sales, the continued-slow growth in PC shipments, and an overall slowdown in the growth of smartphone shipments, said Digitimes Research.Leading pure-play foundry TSMC has budgeted a record US$12 billion in capex for 2015. During the year, the company is looking to expand its 16nm FinFET process production capacity while building manufacturing lines for its more-advanced 10nm technology, Digitimes Research indicated.In addition, TSMC is expected to see sales generated from 20nm process technology jump to US$6.34 billion in 2015 from US$2.15 billion in 2014. The foundry moved its 20nm node technology to commercial production in the third quarter of 2014, Digitimes Research said.Meanwhile, IDM foundry Samsung Electronics has been focusing on its 14nm FinFET development and time-to-market since 2014, Digitimes Research observed. By partnering with Globalfoundries, Samsung will also be able to make its offering more cost-competitive than rivals while achieving better production yield rates in the advanced 1Xnm process market segment in 2015, Digitimes Research said.Digitimes Research forecast that Samsung's share of the global IC foundry market will climb 1.5pp to 10% in 2015.

Google is planning to push 2-in-1 devices in 2015, according Digitimes Research's inquiries within the upstream supply chain. Google's 2-in-1 Chromebook designed by Quanta Computer is expected to be completed by the end of the first quarter.The device features a detachable form factor and runs Android in the tablet form and Chrome when attached to a keyboard. The product's availability shows that Google has achieved a dramatic advance in its progress integrating Android and Chrome OS.The 2-in-1 Chromebook is believed to be launched under the Google brand. Google announced plans to develop products and applications to seamlessly integrate Android with Chromebook at Google I/O in June 2014. In addition to Google, some brand vendors also plan to launch 2-in-1 Chromebook products in 2015, Digitimes Research's findings showed.In 2014, worldwide Chromebook shipments reached 6.5 million units, but over 85% of the volume was sold in the US, and over 80% of the sales were K12 and below education procurement orders, which was not healthy for Chromebook to expand its market presence.However, with the integration of the Android ecosystem, Chromebooks are expected to gain a better chance of expanding in the consumer market and countries outside the US.To defend from 2-in-1 Chromebooks' penetration, Microsoft is planning to offer new low-price projects for Windows 10 for the second half, and will provide low licensing fees for 10.1-inch and below 2-in-1 devices and models with display sizes between 10.1- and 12.5-inch.At the same time, Microsoft will also launch an own-brand 10.6-inch Surface detachable 2-in-1 to promote Windows-based 2-in-1 devices.

Taiwan-based ODMs shipped 21.90 million LCD monitors in the fourth quarter of 2014, decreasing 1.2% sequentially and 10.5% on year, according to Digitimes Research.Of the shipments, 58.1% were 20-inch and above models, Digitimes Research indicated.Taiwan-based makers shipped 85.81 million LCD monitors in 2014, dropping 4.6% on year. Their global market share reached 63.1%, down 0.2pp from 2013.The upcoming long Lunar New Year holidays in China will affect Taiwan-based ODMs' production there. Their monitor shipments will continue to decline in February, decreasing 5.4% sequentially to 20.72 million units. But compared to the volume for the same month in 2014, it will register growth, according to Digitimes Research.For 2015, global monitor shipments are expected to decline 2-3% to a volume under 133 million.

Taiwan-based TFT-LCD panel makers shipped 356.472 million small- to medium-size panels in the fourth quarter of 2014, growing 8.1% on quarter but dipping 3.3% on year, according to Digitimes Research.a-Si TFT-LCD panels accounted for 90.8% of the shipments and LTPS (low-temperature poly-Si) models for 9.2%, Digitimes Research indicated.In terms of application, handsets accounted for 78.9% of shipments, tablets 6.6%, automotive displays 3.8%, digital cameras 3.5% and GPS PNDs 2.3%.Chunghwa Picture Tubes (CPT), HannStar Display and Innolux were the three largest makers, accounting for 34.7%, 30.2% and 21.7% of shipments.Taiwan-based makers shipped 1.338 billion small- to medium-size panels in 2014, declining 8.2% on year.

Korea-based vendors who have adopted a one-stop business model for their LCD TV business have recently placed some strategic orders with outside ODMs for 2015. Samsung Electronics has outsourced production to China panel maker BOE's TV manufacturing subsidiary Beijing BOE Multimedia Technology, while LG Electronics has outsourced some of its LCD TV models for the North America market to Compal Electronics.Shipments are expected to reach at least one million units in both cases.Through the orders, Digitimes Research believes, the Korea-based vendors are looking to secure their external panel supply sources and gain better understanding of Taiwan ODMs' manufacturing capability and pricing structure.Samsung and LG, two major vendors in the global LCD TV market, have mainly adopted in-house produced components for their sets that they are also manufacturing in house. But LG made contacts with Taiwan's ODMs about the outsourcing orders in 2014.Compal has already started a project handling the LG orders and products will start shipping in the second quarter with a volume of around one million units. The LCD TVs adopt panels not manufactured by LG Display (LGD), a panel making subsidiary of the LG Group.By outsourcing its TV production to BOE, Samsung is clearly trying to secure external panel supply. Despite the fact that the LCD TV market is already saturated, Samsung is still aggressively expanding its presence in the market and aiming to sell 60 million LCD TVs in 2015, up from 50 million units in 2014.To achieve the goal, Samsung needs to acquire a sufficient supply of panels for 2015. Since only a limited number of panel suppliers are producing 32-inch panels - the most popular LCD TV size for emerging markets - Samsung is believed to have accepted the term from BOE to outsource parts of its LCD TV manufacturing to BOE's subsidiary in exchange for a stable 32-inch panel supply.Samsung's orders to BOE's subsidiary reportedly will reach between 1-3 million units. The final volume of BOE's LCD TV orders will depend on the supply status of the 32-inch panels in 2015.

Taiwan-based brand vendors and ODMs will ship a total of 18.05 million handsets in the first quarter of 2015, down 29.4% on quarter but up 11.2% on year, according to Digitimes Research.Of the total shipments for the quarter, smartphones will account for 16.55 million units, decreasing by 25.3% from the previous quarter but increasing 25.1% from a year earlier.The top-three ODMs, Chi Mei Communication Systems (CMCS), Compal Electronics and Arima Communications, will see their combined shipments slip over 30% sequentially in the first quarter due to decreasing orders from Sony Mobile Communications and Microsoft Mobile, Digitimes Research pointed out.Smartphone vendor HTC will see its shipments fall within a range of 10% on quarter in the first quarter, buoyed by orders for its mid-range models. Smartphone shipments from Asustek Computer and Acer aree xpected to dive 35% and 50% sequentially in the quarter due to high inventories at channels, Digitimes Research estimates.

Global demand for LCD TV panels in terms of total area in 2015 is estimated at 126.107 million square meters, increasing on year by 11.2%, according to Digitimes Research.The average screen size for LCD TV panels in 2015 was previously forecast at 40.5 inches, Digitimes Research indicated. Because Samsung Display and LG Display maintain a strategy of shipping LCD TV panels of larger sizes and China-based BOE Technology and China Star Optoelectronics Technology will increase shipments of 48- and 55-inch LCD TV panels, the 2015 average size has been upward adjusted to 40.9 inches, increasing on year by 3.8%.

Notebook shipments (excluding detachable models) by the top-five vendors as well as top-three ODMs suffered a sequential decline of 25% and 19%, respectively, in January due to a high level of inventory at channels which resulted mainly from excess shipments of consumer models by Hewlett-Packard (HP) and Lenovo in the November-December period, according to Digitimes Research.HP and Lenovo saw their notebook shipments plunged 45% and 30% on-month, respectively, in January, while other brands managed to control the sequential decline rates within 10%.Among the top-three ODMs, Compal Electronics suffered a significant drop in shipments in January as a major portion of its orders were coming from HP and Lenovo, said Digitimes Research.While vendors were ramping entry-level consumer models in the fourth quarter of 2014, shipments of Chromebooks in the quarter were down more than 20% from the previous quarter. This may have been the result of competition coming from shipments of more models under Microsoft's low-cost strategy, or of a declining momentum of Chromebooks themselves. Shipments of Chromebooks by Acer and Samsung Electronics, mainly to the education segment, slid substantially in the fourth quarter.Microsoft is expected to continue to resort to a low-licensing fee policy to ward off competition from Chromebooks in 2015, but the package deals for Windows 10 and Windows 8.1 will be different in the third quarter. Low-cost Windows 10-based models will still be limited at 14-inch models without the use of HDDs for main storage, but will not be confined only to the sub-US$249 segment.